'Me-first' attitude driving fight for lavish benefit

The lavish perk that did the most to bankrupt Stockton is free lifetime medical care for some retired city employees and spouses. Now retirees are suing to keep it free.

Michael Fitzgerald

The lavish perk that did the most to bankrupt Stockton is free lifetime medical care for some retired city employees and spouses. Now retirees are suing to keep it free.

The city has not stopped the preposterously generous medical plan, the cost of which at one time bloated to a gargantuan $540 million unfunded liability.

No, it merely now requires retirees to pay the premium, the amount charged by the insurer for coverage. The city, in its suicidal munificence, paid that for decades, too.

To ease the transition, the city is defraying the premium cost for one year.

This seems fair. Free lifetime medical is unheard of in the private sector (I was tempted to say "in the real world"). Even other governments, such as the county of San Joaquin, do not offer it.

Ordinary people pay premiums for their medical insurance. And Stockton is broke. It is struggling to pay for police and other services.

But this week, the Association of Retired Employees of the City of Stockton, ARECOS, asked a federal bankruptcy judge to extend their free ride.

It seems like the head of ARECOS, retired City Manager Dwane Milnes - a lead architect of Stockton's fiscal disaster - is striving to cement his legacy as Stockton's fiscal scourge.

But perhaps the issue is more complex. ARECOS claims premium costs will ruin retirees on smaller pensions. For the sickest, the new cost is a veritable death sentence, its court filings say.

Milnes and other ARECOS officers say their concern is for lowly city retirees with small pensions. Though lifetime health care is a bonanza, retirees on modest pensions may be ruined by the cost of premiums, they say.

"How many lives are going to be lost because they can't cover medical?" asked L. Patrick Samsell, ARECOS' treasurer. "We have to protect the meek and the weak."

Roughly one-third of ARECOS members make $3,000 or less in pension a month, Samsell said.

But, according to the group's court filing, premiums are $875 a month for a single retiree (29 percent of $3,000); $1,576 for retiree and spouse (52.5 percent); and $2,102 for a family (74.9 percent).

George Randels, an ethicist at University of the Pacific, said the city might have means-tested retirees and paid all or part of the premium for the poorest.

It might also have issued waivers to the handful of hospitalized retirees whose lives really are at stake.

In the main, though, the city has the right to prioritize who gets what, especially since the retirees with medical number 1,100 while City Hall serves 300,000 citizens.

Of the retiree suit: "It's certainly a me-first attitude," Randels said. "And let somebody else take the hit, and not us."

The city's action must be viewed in the context of its fiscal death struggle.

When the city cut active employee compensation up to 23 percent, not counting furloughs and other takebacks, city employees began to quit.

Looking for cuts elsewhere was not only a fairness issue but also a practical decision not to impel an additional 50 to 100 employees out the door. Doing so would further compromise the city's ability to function, city officials say.

When Milnes and his contemporary city officials gave away the Rolls-Royce medical benefit, they also gave away enhanced retirement benefits.

So 900 of 1,100 retirees receiving the medical benefit got, if not a windfall in pension, an enhanced ability to pay premiums. So goes City Hall's counterargument.

The strongest argument against the retirees may come from their own court filing.

As evidence of the hurt that premiums would put on retirees, it presents several individual cases. One is Shelley Green, 62, of Lodi. Green worked for the city from 2003 to 2009.

Cuts would force Green to pay 9.3 percent of her income for premiums.

Green's husband has been hospitalized at Stanford Medical Center for more than two months with a serious heart condition. He also was helicoptered to neurointensive care and brain surgery. He also has bladder cancer.

The costs must be astronomical. The Greens would never get other insurance.

As it stands, the city provides the Greens' health care for life. She is demanding taxpayers continue to pay her premiums, too - though she worked for the city for only six years.